DOCSLIB.ORG

What Are Stock Markets?

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
What Are Stock Markets? LESSON 7 WHAT ARE STOCK MARKETS? LEARNING, EARNING, AND INVESTING FOR A NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY 107 LESSON 7 WHAT ARE STOCK MARKETS? LESSON DESCRIPTION Primary market The lesson introduces conditions necessary Secondary market for market economies to operate. Against this background, students learn concepts Stock market and background knowledge—including pri- mary and secondary markets, the role of in- OBJECTIVES vestment banks, and initial public offerings Students will: (IPOs)—needed to understand the stock • Identify conditions needed for a market market. The students also learn about dif- economy to operate. ferent characteristics of major stock mar- kets in the United States and overseas. In • Describe the stock market as a special a closure activity, students match stocks case of markets more generally. with the market in which each is most • Differentiate three major world stock likely to be traded. markets and predict which market might list certain stocks. INTRODUCTION For many people, the word market may CONTENT STANDARDS be closely associated with an image of a Voluntary National Content Standards place—perhaps a local farmer’s market. For in Economics, 2nd Edition economists, however, market need not refer to a physical place. Instead, a market may • Standard 5: Voluntary exchange oc- be any organization that allows buyers and curs only when all participating parties sellers to communicate about and arrange expect to gain. This is true for trade for the exchange of goods, resources, or ser- among individuals or organizations vices. Stock markets provide a mechanism within a nation, and among individuals whereby people who want to own shares of or organizations in different nations. stock can buy them from people who want • Standard 7: A market exists when to sell shares of stock. buyers and sellers interact. This in- The three largest stock markets in the teraction determines market prices world are the New York Stock Exchange and thereby allocates scarce goods and (NYSE), the NASDAQ Stock Market, and services. the Tokyo Stock Exchange. Although these • Standard 10: Institutions evolve and markets differ from one another, especially are created to help individuals and in the kinds of stock traded and the mecha- groups accomplish their goals. Banks, nisms used for trading, all three are known labor unions, markets, corporations, as secondary markets. They are different legal systems, and not-for-profi t orga- from a primary market in which a company nizations are examples of important sells shares and receives money in an ini- institutions. A different kind of insti- tial public offering (IPO). tution, clearly defi ned and enforced property rights, is essential to a market CONCEPTS economy. Initial public offering (IPO) Market 108 LEARNING, EARNING, AND INVESTING FOR A NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY WHAT ARE STOCK MARKETS? LESSON 7 National Standards in K-12 Personal • Private property. Markets de- Finance Education, 3rd Edition pend on an individual’s ability to own and sell property. In market • Financial Responsibility and Deci- transactions, people can choose to sion Making Standard 2: Find and sell property to others and trans- evaluate fi nancial information from a fer the right of ownership with the variety of sources. sale. • Saving and Investing Standard 4: • Competition. Markets foster Describe how to buy and sell invest- competition because they allow the ments. entry of many producers striving to meet the demands of consumers. TIME REQUIRED Competition pressures these pro- 60 minutes ducers to satisfy consumer demand or be forced from the market by MATERIALS others who can. • Slide 7.1 • The profi t motive. Profi ts act • A copy of Activity 7.1 for each student as incentives for individuals and (Internet access required) fi rms. In market transactions, individuals and fi rms that satisfy consumer desires and produce ef- PROCEDURE fi ciently are rewarded with profi ts. 1. Tell the students that this lesson fo- cuses on markets in general and on the • Voluntary exchange. Because stock market in particular. Ask: What consumers have choices in a mar- is a market? What is a stock market? ket, market exchanges are volun- tary. This allows consumers and 2. To begin discussing markets, ask the producers to focus on what they students to list several markets they do best and to trade with others have participated in over the last few who specialize in different areas. weeks. (Examples might include a Markets encourage trade and thus farmers’ market, a supermarket, a retail create wealth. store, a gasoline station.) 4. Introduce the lesson’s focus on stock 3. Ask the students to think about what markets by reference to the previous it would take to establish and maintain discussion. Just as there is a market markets of the sort they have men- for music downloads (iTunes), blue tioned. What sort of legal and economic jeans (department store), or books environment would be necessary? The (bookstore), there is a market for question is somewhat abstract. To help stocks. Somebody who wants to buy the students get at it, you might use stocks can buy them at a stock market. the following prompt: We couldn’t have markets unless we had 5. Explain that stock markets operate ______________. Challenge the students in the same sort of legal and economic to complete the statement. Provide help environment needed by other mar- as necessary. Make a list of the neces- kets. Stock markets are places where sary conditions on the board. The list private property (shares of ownership) should include the following: is bought and sold. Stock markets are competitive markets, with thousands of LEARNING, EARNING, AND INVESTING FOR A NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY 109 LESSON 7 WHAT ARE STOCK MARKETS? buyers and sellers striving to make the to brokerage houses, and brokers offer best trades they can. The profi t motive the shares for sale to individuals and prompts traders to obtain and keep institutional buyers on the secondary any gains they can make from stock market through one of the major stock trading. And stock markets depend on exchanges like the New York Stock voluntary exchange. Stock trades are Exchange (NYSE), the NASDAQ Stock not coerced; rather, buyers and sellers Market in the United States, or a stock choose to participate in their efforts to market in another country, such as the invest money wisely. London Stock Exchange or the Tokyo Stock Exchange. 6. As necessary, pause here to establish clearly what a stock is (or review Les- 9. Distribute a copy of Activity 7.1 to son 4). Explain that a stock is a share each student. Have the students read of ownership in a company. If you buy the introduction. Briefl y review the 100 shares of Acme Electronics, you be- overview of market mechanics, using come a part-owner (100 shares’ worth) Slide 7.1 as needed. of Acme Electronics. And why would 10. Have the students read the descrip- people want to buy stock in a given tions of the three major stock markets. company? Identify two main reasons: Call on students to identify the distinc- (a.) they expect to share in a company’s tive characteristics of each of the three profi ts (called dividends) paid out to markets. Record their responses on the shareholders; (b.) they believe the price board. Sample responses: of the company’s stock will rise above the price they paid for it—in other New York NASDAQ Tokyo Stock words, that their asset will grow in Stock Stock Market Exchange value. Exchange (NYSE) 7. Ask the students if they have ever seen Founded in Founded in Founded in a stock store at the mall. If not at the 1792. 1971. 1878. mall, where can you go to buy stocks? Explain that almost all stock sales and About 3,500 About 2,800 About 2,300 companies companies companies purchases—often called stock trades— listed. listed. listed. are handled by a specialized salesper- son called a broker. In addition, almost Home of large Considered the Home of the and well- home of tech Nikkei 226 all stocks are sold by these brokers in established stocks. index. secondary markets. companies. No physical Companies 8. To distinguish between primary and Listed location; separated into secondary markets, Display Slide 7.1. companies trades done three categories: Explain that companies such as Com- must have via computer large, mid- pany X often seek additional resources at least network. sized, and $100,000,000 growth/ Largest market to expand or run their business. One in outstanding startup. in terms of way to generate these resources is to stock and trade stocks traded. 104 members. offer all, or a portion, of the company an average of for sale to the public-at-large (“take a at least 100,000 No fi xed company public”). This is done in the shares per day. number of members. primary market through an initial 1,336 member public offering (IPO) in which stocks seats. are sold to large investment banks. Investment banks then sell the shares 110 LEARNING, EARNING, AND INVESTING FOR A NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY WHAT ARE STOCK MARKETS? LESSON 7 11. Have the students complete the Place correct). If a student has a calculator, it the Stock activity. Answers: might be made by Casio or Sony. Both of these fi rms are traded on the Tokyo Market Stocks Stock Exchange. Once the students New York Stock Con Ed DuPont McDon- have made their guesses, ask them to Exchange ald’s use the internet in class to determine (NYSE) which ones are correct and which are NASDAQ Stock Atari Intel Telecom incorrect (or you might assign this as Market Austria homework or a library project).
Load more

Recommended publications
  • Financial Statements of the Budapest Stock Exchange for the Year 2016 Table of Contents
    FINANCIAL STATEMENTS OF THE BUDAPEST STOCK EXCHANGE FOR THE YEAR 2016 TABLE OF CONTENTS BALANCE SHEET 3 INCOME STATEMENT 5 NOTES TO THE 2016 FINANCIAL STATEMENTS 6 BUSINESS REPORT 33 Statistical Code 12853812-6611-114-01 Company’s Reg. Num. 01-10-044764 BALANCE SHEET Budapest, 18 April, 2017 Richárd Végh Ildikó Auguszt Chairman-CEO Financial Director 3 | Financial statements of the Budapest Stock Exchange for the year 2016 Statistical Code 12853812-6611-114-01 Company’s Reg. Num. 01-10-044764 Budapest, 18 April, 2017 Richárd Végh Ildikó Auguszt Chairman-CEO Financial Director 4 | Financial statements of the Budapest Stock Exchange for the year 2016 Statistical Code 12853812-6611-114-01 Company’s Reg. Num. 01-10-044764 INCOME STATEMENT Budapest, 18 April, 2017 Richárd Végh Ildikó Auguszt Chairman-CEO Financial Director 5 | Financial statements of the Budapest Stock Exchange for the year 2016 NOTES TO THE 2016 ANNUAL REPORT GENERAL COMPANY INFORMATION Name of Company: Budapesti Értéktőzsde Zártkörűen Működő Részvénytársaság Address of Company: H-1054 Budapest, Szabadság tér 7. Company’s Registration No.: Cg. 01-10-044764 Data of persons authorised to Richárd Végh, Chairman-CEO sign the report on behalf of the Address: H-2010 Budaörs, Kálvária utca 7. Company: Ildikó Auguszt, Financial Director Address: H-1138 Budapest, Róbert Károly krt. 18/C The person charged with the management of bookkeeping tasks and the preparation of the annual report: Ildikó Auguszt (address: H-1138 Budapest, Róbert Károly krt. 18/C, registration No. 120433). Statutory audit is obligatory for the Company. Data of the Auditor KPMG Hungary, Audit, Tax and Advisory Services Limited Liability Company HU-1134 Budapest, Váci út 31.
    [Show full text]
  • Ladies of the Ticker
    By George Robb During the late 19th century, a growing number of women were finding employ- ment in banking and insurance, but not on Wall Street. Probably no area of Amer- ican finance offered fewer job opportuni- ties to women than stock broking. In her 1863 survey, The Employments of Women, Virginia Penny, who was usually eager to promote new fields of employment for women, noted with approval that there were no women stockbrokers in the United States. Penny argued that “women could not very well conduct the busi- ness without having to mix promiscuously with men on the street, and stop and talk to them in the most public places; and the delicacy of woman would forbid that.” The radical feminist Victoria Woodhull did not let delicacy stand in her way when she and her sister opened a brokerage house near Wall Street in 1870, but she paid a heavy price for her audacity. The scandals which eventually drove Wood- hull out of business and out of the country cast a long shadow over other women’s careers as brokers. Histories of Wall Street rarely mention women brokers at all. They might note Victoria Woodhull’s distinction as the nation’s first female stockbroker, but they don’t discuss the subject again until they reach the 1960s. This neglect is unfortu- nate, as it has left generations of pioneering Wall Street women hidden from history. These extraordinary women struggled to establish themselves professionally and to overcome chauvinistic prejudice that a career in finance was unfeminine. Ladies When Mrs. M.E.
    [Show full text]
  • Changing Business Models of Stock Exchanges and Stock Market Fragmentation
    OECD Business and Finance Outlook 2016 Changing business models of stock exchanges and stock market fragmentation. This chapter from the 2016 OECD Business and Finance Outlook provides an overview of structural changes in the stock exchange industry. It provides data on CHANGING mergers and acquisitions as well as the changes in the aggregate revenue structure of major stock exchanges. It describes the fragmentation of the stock market resulting from an increase in stock exchange-like trading venues, such as alternative trading BUSINESS MODELS systems (ATSs) and multilateral trading facilities (MTFs), and a split between dark (non-displayed) and lit (displayed) trading. Based on firm-level data, statistics are provided for the relative distribution of stock trading across different trading venues as well as for different OF STOCK EXCHANGES trading characteristics, such as order size, company focus and the total volumes of dark and lit trading. The chapter ends with an overview of recent regulatory initiatives aimed at maintaining market fairness and a level playing field among investors. AND STOCK MARKET Find the OECD Business and Finance Outlook online at www.oecd.org/daf/oecd-business-finance-outlook.htm FRAGMENTATION This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. OECD Business and Finance Outlook 2016 © OECD 2016 Chapter 4 Changing business models of stock exchanges and stock market fragmentation This chapter provides an overview of structural changes in the stock exchange industry.
    [Show full text]
  • Stock Exchanges at the Crossroads
    Fordham Law Review Volume 74 Issue 5 Article 2 2006 Stock Exchanges at the Crossroads Andreas M. Fleckner Follow this and additional works at: https://ir.lawnet.fordham.edu/flr Part of the Law Commons Recommended Citation Andreas M. Fleckner, Stock Exchanges at the Crossroads, 74 Fordham L. Rev. 2541 (2006). Available at: https://ir.lawnet.fordham.edu/flr/vol74/iss5/2 This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted for inclusion in Fordham Law Review by an authorized editor of FLASH: The Fordham Law Archive of Scholarship and History. For more information, please contact [email protected]. Stock Exchanges at the Crossroads Cover Page Footnote [email protected]. For very helpful discussions, suggestions, and general critique, I am grateful to Howell E. Jackson as well as to Stavros Gkantinis, Apostolos Gkoutzinis, and Noah D. Levin. The normal disclaimers apply. An earlier version of this Article has been a discussion paper of the John M. Olin Center's Program on Corporate Governance, Working Papers, http://www.law.harvard.edu/programs/ olin_center/corporate_governance/papers.htm (last visited Mar. 6, 2005). This article is available in Fordham Law Review: https://ir.lawnet.fordham.edu/flr/vol74/iss5/2 ARTICLES STOCK EXCHANGES AT THE CROSSROADS Andreas M Fleckner* INTRODUCTION Nemo iudex in sua causa-No one shall judge his own cause. Ancient Rome adhered to this principle,' the greatest writers emphasized it, 2 and the Founding Fathers contemplated it in the early days of the republic: "No man is allowed to be a judge in his own cause; because his interest would '3 certainly bias his judgment, and, not improbably, corrupt his integrity.
    [Show full text]
  • The Stock Market Profits Blueprint Is an Integrated Stock Market Roadmap
    The Stock Market Profits Blueprint Gambling is for the casino, knowledge is for the stock market! “Combining Technical and Fundamental Analysis to enable you to make great decisions in the Stock Market.” The stock market profits blueprint is an integrated stock market roadmap. Barry D. Moore Certified Technical Analyst (MSTA) Member Society of Technical Analysts Stock Market Profits Blueprint eBook and Website http://www.liberatedstocktrader.com are copyright Barry D Moore 2017 No unauthorized distribution allowed without the authors written consent. Contents Introduction .................................................................................................................................................. 4 How successful are institutional investors and fund managers at investing? .............................................. 4 What should your Stock Market Fund Manager should achieve? ............................................................ 5 The Shocking Truth ................................................................................................................................... 5 FACT: Most actively managed funds will lose you money compared to the market average.................. 6 FACT: Nearly 30% of managed funds are so badly managed they actually go bankrupt. ........................ 6 Why do they not perform better? ............................................................................................................ 7 How successful are passive funds that simply track the market? ...............................................................
    [Show full text]
  • Exchange-Traded Funds (Etfs)
    Investor Bulletin: Exchange-Traded Funds (ETFs) The SEC’s Office of Investor Education and Advocacy investments in stocks, bonds, or other assets and, in is issuing this Investor Bulletin to educate investors return, to receive an interest in that investment pool. about exchange-traded funds (“ETFs”). Unlike mutual funds, however, ETF shares are traded on a national stock exchange and at market prices This Investor Bulletin discusses only ETFs that are that may or may not be the same as the net asset value registered as open-end investment companies or unit (“NAV”) of the shares, that is, the value of the ETF’s investment trusts under the Investment Company assets minus its liabilities divided by the number of Act of 1940 (the “1940 Act”). It does not address shares outstanding. other types of exchange-traded products that are not registered under the 1940 Act, such as exchange- Initially, ETFs were all designed to track the traded commodity funds or exchange-traded notes. performance of specific U.S. equity indexes; those types of index-based ETFs continue to be the The following information is general in nature and is predominant type of ETF offered and sold in the not intended to address the specifics of your financial United States. Newer ETFs, however, also seek to situation. When considering an investment, make sure track indexes of fixed-income instruments and foreign you understand the particular investment product fully securities. In addition, newer ETFs include ETFs before making an investment decision. that are actively managed - that is, they do not merely seek to passively track an index; instead, they seek to achieve a specified investment objective using an What is an ETF? active investment strategy.
    [Show full text]
  • Frequently Asked Questions About Initial Public Offerings
    FREQUENTLY ASKED QUESTIONS ABOUT INITIAL PUBLIC OFFERINGS Initial public offerings (“IPOs”) are complex, time-consuming and implicate many different areas of the law and market practices. The following FAQs address important issues but are not likely to answer all of your questions. • Public companies have greater visibility. The media understanding IPOS has greater economic incentive to cover a public company than a private company because of the number of investors seeking information about their What is an IPO? investment. An “IPO” is the initial public offering by a company • Going public allows a company’s employees to of its securities, most often its common stock. In the share in its growth and success through stock united States, these offerings are generally registered options and other equity-based compensation under the Securities Act of 1933, as amended (the structures that benefit from a more liquid stock with “Securities Act”), and the shares are often but not an independently determined fair market value. A always listed on a national securities exchange such public company may also use its equity to attract as the new York Stock exchange (the “nYSe”), the and retain management and key personnel. nYSe American LLC or one of the nasdaq markets (“nasdaq” and, collectively, the “exchanges”). The What are disadvantages of going public? process of “going public” is complex and expensive. • The IPO process is expensive. The legal, accounting upon the completion of an IPO, a company becomes and printing costs are significant and these costs a “public company,” subject to all of the regulations will have to be paid regardless of whether an IPO is applicable to public companies, including those of successful.
    [Show full text]
  • Read Fact Sheet
    Shanghai-Hong Kong Stock Connect FACT SHEET What is it? Shanghai-Hong Kong Stock Connect is a program that establishes access between the two markets. It will allow international investors to trade in a number of shares listed in Shanghai without having to apply for individual licenses and quotas, and for domestic Chinese investors to trade in some Hong Kong stocks. Who can trade? Chinese institutions, as well as retail investors with a minimum of RMB 500,000 (US$80,769) in their securities accounts, can buy stocks on the Hong Kong exchange. There are no restrictions on the type of international investor that can access the Shanghai market. Can investors buy all listed securities on Hong Kong and Shanghai exchanges? No. At the program’s launch, it will cover 266 stocks listed in Hong Kong, and 568 listed in Shanghai. How big is the program? At launch, there will be a daily limit of RMB 10.5 billion (US$1.7 billion) for net inflows into Hong Kong, and a daily market quota of RMB 13 billion (US$2.1 billion) for net inflows into China. Why is it significant? International investors have had limited access to China’s domestic stock market using an individual quota system. At the same time, retail investors in China have also not had direct access to stocks listed overseas. Stock Connect will allow more international investors including individuals and hedge funds to trade Shanghai-listed shares directly for the first time, while also allowing retail investors in China to trade Hong Kong-listed stocks directly.
    [Show full text]
  • AN ECONOMIC ANALYSIS of STOCK MARKET PRICING and SECURITIES Regulationt
    Michigan Law Review Volume 87 Issue 3 1988 The Unimportance of Being Efficient: Anconomic E Analysis of Stock Market Pricing and Securities Regulation Lynn A. Stout George Washington University, National Law Center Follow this and additional works at: https://repository.law.umich.edu/mlr Part of the Law and Economics Commons, and the Securities Law Commons Recommended Citation Lynn A. Stout, The Unimportance of Being Efficient: Anconomic E Analysis of Stock Market Pricing and Securities Regulation, 87 MICH. L. REV. 613 (1988). Available at: https://repository.law.umich.edu/mlr/vol87/iss3/3 This Article is brought to you for free and open access by the Michigan Law Review at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Law Review by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. THE UNIMPORTANCE OF BEING EFFICIENT: AN ECONOMIC ANALYSIS OF STOCK MARKET PRICING AND SECURITIES REGULATIONt Lynn A. Stout* TABLE OF CONTENTS INTRODUCTION ••.....••• •"•............................... 615 I. THE INFLUENCE OF EFFICIENCY OBJECTIVES ON THE REGULATION OF SECURITIES MARKETS . • . • . • . • 619 . A. Insider Trading . 622 B. Trading in Stock Index Futures . • . 627 C. Disclosure of Merger Negotiations and Other Soft Information . 632 D. Summary . 637 II. THE ECONOMIC FUNCTIONS OF STOCK PRICES................................................ 641 A. Efficient Markets and the Allocation of Investment Capital Among Corporations . 642 1. The Unimportance of Equity as a Source of Capital . 644 a. Firms rarely use equity issues to raise capital . 645 b. Equity prices do not significantly influence the cost of other sources of capital.
    [Show full text]
  • The Australian Stock Market Development: Prospects and Challenges
    Risk governance & control: financial markets & institutions / Volume 3, Issue 2, 2013 THE AUSTRALIAN STOCK MARKET DEVELOPMENT: PROSPECTS AND CHALLENGES Sheilla Nyasha*, NM Odhiambo** Abstract This paper highlights the origin and development of the Australian stock market. The country has three major stock exchanges, namely: the Australian Securities Exchange Group, the National Stock Exchange of Australia, and the Asia-Pacific Stock Exchange. These stock exchanges were born out of a string of stock exchanges that merged over time. Stock-market reforms have been implemented since the period of deregulation, during the 1980s; and the Exchanges responded largely positively to these reforms. As a result of the reforms, the Australian stock market has developed in terms of the number of listed companies, the market capitalisation, the total value of stocks traded, and the turnover ratio. Although the stock market in Australia has developed remarkably over the years, and was spared by the global financial crisis of the late 2000s, it still faces some challenges. These include the increased economic uncertainty overseas, the downtrend in global financial markets, and the restrained consumer confidence in Australia. Keywords: Stock Market, Australia, Stock Exchange, Capitalization, Stock Market *Corresponding Author. Department of Economics, University of South Africa, P.O Box 392, UNISA, 0003, Pretoria, South Africa Email: [email protected] **Department of Economics, University of South Africa, P.O Box 392, UNISA, 0003, Pretoria, South Africa Email: [email protected] / [email protected] 1. Introduction key role of stock market liquidity in economic growth is further supported by Yartey and Adjasi (2007) and Stock market development is an important component Levine and Zevros (1998).
    [Show full text]
  • (TOPIX High Dividend Yield 40 Index) December 25, 2020 Tokyo Stock
    Tokyo Stock Exchange Index Guidebook (TOPIX High Dividend Yield 40 Index) December 25, 2020 Tokyo Stock Exchange, Inc. Published December 25, 2020 DISCLAIMER: This translation may be used for reference purposes only. This English version is not an official translation of the original Japanese document. In cases where any differences occur between the English version and the original Japanese version, the Japanese version shall prevail. This translation is subject to change without notice. Tokyo Stock Exchange, Inc., Japan Exchange Group, Inc., Osaka Securities Exchange Co., Ltd., Tokyo Stock Exchange Regulation and/or their affiliates shall individually or jointly accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or changes with regard to this translation. 1 Copyright © 2017- by Tokyo Stock Exchange, Inc. All rights reserved Contents Record of Changes................................................................................................................. 3 Introduction........................................................................................................................... 4 Ⅰ. Outline of the Index.................................................................................................... 4 Ⅱ. Index Calculation........................................................................................................ 5 1. Outline....................................................................................................................... 5
    [Show full text]
  • Dividends: What Are They, and Do They Matter?
    MIDDLE SCHOOL | UNIT 6 Growing and Protecting Your Finances Title Dividends: What Are They, and Do They Matter? LEARNING OBJECTIVES Content Area Students will: Math • Review what stocks are and that investing in them Grades involves risk. 6–8 • Develop an understanding of dividends and yield. Overview • Understand how to determine How can you make money in the stock market? Students discover that buying and if a company pays a dividend selling stocks is not the only way to make money in the stock market. They learn or not. what dividends are and investigate which companies pay dividends. The activity • Calculate annual dividend begins with an overview of investing and the traditional “buy low and sell high” payments using ratios. method. Students then learn about dividends and how yield is a numeric indicator of a company’s dividends. As a class, students investigate whether each company in a provided set pays a dividend. Each student selects companies from the list to create his or her own hypothetical portfolio. Students use dice to determine their number of shares in each company and then calculate their dividend payments. The activity concludes with students considering whether they would invest in dividend-paying stocks and a reminder that all investments come with the potential for loss. Themes Personal Finance: Investing, dividends Math: Ratios, rates, percentages Common Core Math Standards MP1 Make sense of problems and persevere in solving them. MP2 Reason abstractly and quantitatively. Copyright © 2019 Discovery Education. All rights reserved. Discovery Education, Inc. 1 Middle School Unit 6 | Dividends: What Are They, and Do They Matter? 6.RP.A.3 Use ratio and rate reasoning to solve real-world and mathematical problems, e.g., by reasoning about tables of equivalent ratios, tape diagrams, double number line diagrams, or equations.
    [Show full text]